Africa Pausing

IMF Blog, May 31, 2016

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Title: Africa Pausing
Author: Jeff Hayden
Date: May 31, 2016
Context: Strong performance by many African economies over the past two decades led some commentators to coin the term “Africa Rising.”
Noted milestone: The term “Africa Rising” graced the cover of TIME magazine in December 2012.
Broad narrative: Beginning in the mid-1990s, many—but certainly not all—countries in sub-Saharan Africa energized their economies, achieving in recent years some of the world’s highest growth and improved living standards, health care, and other key services.
Current inflection: The past year has been harsh, with a sharp slowdown attributed to several factors.

Slumping commodity prices.
Softer global economic conditions.
Drought in some countries.
China slowing as it retools its economy, affecting African trade and business partners.
Result: A wave of pessimism and questions about whether the “Africa Rising” story has come to an end.
Comparative severity: Described as the toughest conditions in a decade.

Central claim: Many countries are well positioned to ride out the current storm and that strong growth will resume, albeit with a pause or two along the way.
Factors improving resilience (per overview by Steven Radelet):
- Marked improvements in governance.
- Emergence of more adroit leaders and economic managers.
- Better economic and social policies.
Radelet’s conditional outlook: The long-term outlook for growth is solid for countries that:
- Diversify their economies.
- Increase competitiveness.
- Further strengthen their institutions of governance.
Antoinette Sayeh (IMF’s African Department) argues:
- Underlying drivers of growth over the past decade still persist.
- A reset of monetary and fiscal policies can help reignite sustainable growth in the region.
Time horizon language: Growth is “likely to slow in the next few years” but underlying drivers remain.

Digital technologies that increase access to financing.
Regional economic agreements that foster closer business ties.
Increased women’s participation in the workforce.
A focus on improving infrastructure and health care.
Sector spotlight: Nigeria’s film industry, “Nollywood,” identified as one of the world’s largest film industries in terms of number of films produced.